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South Korean court slaps Deutsche Bank with 8.55B won compensation payment

The Seoul Central District Court has ordered Deutsche Bank AG to pay 8.55 billion South Korean won to six plaintiffs of a class-action suit for losses it caused through the manipulation of stock prices, Yonhap News Agency reported Jan. 20.

The plaintiffs had invested in Korea Investment & Securities Co. equity-linked securities products in 2007, which were based on shares of Samsung Electronics and KB Kookmin Bank.

Deutsche Bank lowered the price of KB Kookmin's stock by selling its shareholding in the South Korean bank prior to the expiry date of the products in August 2009. The German bank had been contracted to hedge the products for Korea Investment & Securities.

The court ruled that the plaintiffs should have received 128.6% of their principal, but only got 74.9% due to the stock price manipulation. As a result, the court awarded them compensation for damages.

This is the first suit of its kind after the promulgation of the Securities-Related Class Action Act in 2005. If the top court in the country confirms the ruling, others that bought into the same securities products will also benefit.

As of Jan. 20, US$1 was equivalent to 1,174.75 South Korean won.